Top Penny Stocks 2019
What are Penny Stocks?
Penny stocks are the stocks of small companies that trade at very low prices. Such stocks are usually listed on smaller exchanges and are quite illiquid with a low market capitalization. Due to the absence of good liquidity, less trading volumes, and limited information available on them, penny stocks are quite risky in nature.
However, since the penny stocks trade at a low value, it is easy to invest in them with a small amount of capital. They also have the potential of converting small investments into significant gains. Therefore, a lot of traders trade penny stocks despite the risks involved.
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Hot Penny Stocks for 2019
Certain penny stocks hold good potential in 2019. The companies are small for now, but they are well-positioned for sustainable growth. Hence, some of these penny stocks can turn out to be hot investments for 2019.
- Americas Silver Corporation – USA (TSE): Analysts believe that investing in silver miners can give good returns in 2019. Therefore, Americas Silver Corporation is one of the top penny stocks to invest in 2019. The company has growing revenues and has also entered into high-yielding strategic partnerships recently.
- Arotech Corporation – ARTX (NASDAQ): Arotech is a growing security and defense company. It reported revenues of $98.7 million and earnings of $3.8 million for the most recent fiscal year. The company also has a compelling P/E ratio of 23.7 and is placed well for growth.
- Mid-Con Energy Partners – MCEP (NASDAQ): Mid-Con is an oil and natural gas producer. The stock trades just above a dollar, however, the financials of the company are showing an upward trend and can turn out to be a good investment.
Good Penny Stocks that Closed 2018 Positively
The penny stocks that did well in 2018 are as follows:
- Alimera Sciences – ALIM (NASDAQ): The stock of Alimera showed a 25% increase from the beginning of 2018 to the middle of 2018. The company showed impressive development in the biotech industry and obtained approvals for its medicines in Spain that led to double-digit revenue growth year-over-year.
- Groupon – NASDAQ: GRPN: The share price of Groupon plummeted from 2011 to 2017. However, the penny stock showed tremendous growth in 2018 due to improved financials and reduction in competition.
Why Do Beginning Traders Start with Penny Stocks?
The most significant reason for traders to start trading with penny stocks is the low cost of penny stocks. Right at the beginning of the trading career, traders have a limited amount of capital which is not sufficient to buy big stocks.
Therefore, the neophyte traders get attracted by the idea of being able to buy, 5,000 shares of a 10-cent stock for only $500. In this case, even if the price of the stock goes up to 15 cents, the traders can earn a 50% return.
Tradenet believes Penny Stocks are a bad way to achieve trading success
Tradenet and its analysts, including Meir Barak and Scott Malatesta, believe that penny stocks are not an ideal way to become successful. There are some apparent drawbacks of trading penny stocks, apart from the obvious fact that penny stocks are highly speculative in nature.
- Meir Barak recommends that the traders should not trade stocks at less than $10, or $5 in some extreme cases. Since penny stocks trade at a price lower than $5, they are not usually traded by financial institutions. Due to the absence of institutional traders in penny stocks trading, markets lack the basic trading patterns that are common in stocks trading. When there is no pattern to follow, trading becomes more of gambling.
- As the penny stocks trade at very low prices, it becomes quite easy for the speculators and malicious players in the market to commit fraud. These buyers buy hundreds of thousands of shares of penny stocks and inflate their price temporarily. This large number of shares is then dumped on the market at high profits. The price of penny stocks tumbles down, and investors suffer huge losses.
- Penny stocks have also been a part of many other scams like mining scams, no net sales scams, offshore scams, and the Guru scams.
How Does Tradenet Help
Tradenet offers help to the novice traders to not get into the alluring trap of penny stocks. The education pack of Tradenet gives the new traders eligibility to apply for a funded trading account.
These funded accounts give the traders a very high buying power with a rather small expense. If they make profits, they can retain up to 85% of their profits. In this way, even the new traders with less capital can trade in the big’s league and not rely on penny stocks for their trading and success.